Johnson v. Farmers & Merchants Bank

379 S.E.2d 752, 180 W.Va. 702 (1989)

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Johnson v. Farmers & Merchants Bank

West Virginia Supreme Court of Appeals
379 S.E.2d 752, 180 W.Va. 702 (1989)

Facts

Fred O. Johnson was married to Dorothy Marie Johnson (plaintiff) for approximately 20 years before his death in 1983. Concerned about his health, Fred executed a trust agreement on March 11, 1982, placing most of his assets into an inter vivos trust with Farmers and Merchants Bank (FMB) (defendant) as trustee. Fred retained complete control of the trust assets during his remaining life, even selling a corporation held by the trust without the trustee’s consent. Upon Fred’s death, the trust held approximately $1.4 million in assets, and over $150,000 was in Fred’s probate estate. The trustee of Fred’s estate was instructed to move $250,000 into another trust, and Dorothy was to receive the income from that trust. Under Fred’s will, Dorothy received property valued at approximately $20,000, significantly less than her elective share of Fred’s assets would have been had he not transferred most of his assets into the trust. Dorothy renounced Fred’s will and filed suit to set aside the 1982 inter vivos trust as an illusory transfer or consummated fraud. The court held that Fred’s retention of extensive control over the trust assets made the trust testamentary and granted summary judgment in Dorothy’s favor. FMB appealed.

Rule of Law

Issue

Holding and Reasoning (Brotherton, J.)

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